Coldwell v. Moore, 13 CO 27.

• Citation: 22 N.E.3d 1097
• Decision Date: 21 November 2014
• Docket Number: No. 13 CO 27.,13 CO 27.
• Parties: David COLDWELL, et al, Plaintiffs–Appellants, v. Matthew MOORE, et al., Defendants–Appellees.
• Court: D.C. Court of Appeals

22 N.E.3d 1097

David COLDWELL, et al, Plaintiffs–Appellants
v.
Matthew MOORE, et al., Defendants–Appellees.

No. 13 CO 27.

Court of Appeals of Ohio, Seventh District, Columbiana County.

Nov. 21, 2014.

22 N.E.3d 1098

James L. Blomstrom, Youngstown, OH, for plaintiffs-appellants.

Robert J. Karl, R. Benjamin Franz, Columbus, OH, for defendants-appellees.

MARY DeGENARO, P.J., GENE DONOFRIO, and CHERYL L. WAITE, JJ.

Opinion

DONOFRIO, J.

{¶ 1} Plaintiffs-appellants David Coldwell, et al., appeal the decision of the Columbiana County Common Pleas Court rescinding a purchase agreement between themselves and defendants-appellees Matthew Moore, et al., for the sale of mineral rights.

{¶ 2} Although this dispute resulted in a bench trial, the facts are generally undisputed on appeal. Plaintiffs-appellants David Coldwell and Lisa Coldwell (collectively, the Coldwells) own and operate a sustainable tree farm that sits atop approximately 600 acres in Salineville, Columbiana County, Ohio. The tree farm is comprised of twelve surface parcels which they own, but they do not own approximately 200 acres of the subsurface parcels.

{¶ 3} Defendants-appellees Matthew and Lorelei Moore, Michael and Colleen Lester, Blaine and Mary Moore, and Lynette Moore Beeler (collectively, the Moores) each own an undivided one-quarter interest in four subsurface parcels that total approximately 237.41 acres. Three of their subsurface parcels underlie the Coldwell's tree farm and the other underlies a surface parcel contiguous to the Coldwell's tree farm but owned by Marvin and Juanita Hiltabidle (collectively, the Hiltabidles) who are not parties to this case. The Moores, who reside in Harrogate, Tennessee and collectively have owned the parcels since 2007, had purchased some of the subsurface parcels and the others were received as gifts from previous generations of the Moore family, including David O'Mahen, an uncle by marriage to the Moores.

{¶ 4} In 2007, David Coldwell learned about the Forest Legacy Program (FLP). The FLP is a grant program administered by the U.S. Forest Service. The FLP gives landowners money in exchange for restricting the use and development of their land, particularly the surface of the land. When David Coldwell looked into the FLP, a person with the Division of Forestry indicated to him that participation in the FLP was contingent upon the landowner owning all of the mineral rights to the property.

{¶ 5} The Coldwells also learned that while the FLP restricted exploitation of the surface minerals, such as surface strip mining for coal, it did not foreclose subsurface mineral exploitation with a limited surface impact. In other words, the FLP did not forbid oil and gas exploration.

{¶ 6} As it pertained to the Coldwell's surface parcels that were located above the Moore's subsurface parcels, David Coldwell believed that his surface parcels contained the rights to oil and gas while the Moore's subsurface parcels contained only rights to coal and other mineable minerals. Sometime in 2007 or before, David Coldwell contacted the Moore's predecessor in title, David O'Mahen, about purchasing the four subsurface parcels. After consulting with family members, O'Mahen offered to sell the parcels to him for $50,000, but he declined.

{¶ 7} After 2007, defendant-appellee Matthew Moore replaced O'Mahen as the

22 N.E.3d 1099

Moore's representative and David Coldwell contacted him several times through 2008 and 2009 about buying the Moore's subsurface parcels. Coldwell told Moore that he thought that the Moore's subsurface parcels were of little value, but that he wanted to buy them to improve his chances with the FLP.

{¶ 8} Meanwhile, still believing that they owned the oil and gas rights to all of their property, the Coldwells signed an oil and gas lease with Patriot Energy Partners (Patriot) in 2008. The lease included the Coldwell's surface parcels that were located above three of the Moore's subsurface parcels.

{¶ 9} In 2010 and after David Coldwell had fallen ill, his son Jed Coldwell renewed his family's efforts to buy the Moore's parcels. Matthew Moore and Jed reached an agreement which Moore understood to mean that they would reserve royalty interests on all minerals, not just coal.

{¶ 10} The Coldwell's attorney prepared a Purchase Agreement under which the Moores conveyed to the Coldwells “MINERAL RIGHTS ONLY” in the four subsurface parcels for $8,000 with the Moores retaining royalties on coal. The Coldwells signed the agreement and sent it to the Moores along with a $100 earnest money check. The Moores cashed the check, signed the agreement and sent it back to the Coldwells.

{¶ 11} The Coldwells' attorney then prepared a deed and sent it to the Moores. This time, after examining the deed, Matthew Moore noticed the coal royalties reservation. He called David Coldwell and told him mistakes had been made but that they would sign the deed if the mistakes were fixed. David Coldwell conveyed his willingness to pay the balance of the purchase price, demanded the Moores sign the deed, but they refused.

{¶ 12} On February 14, 2011, the Coldwells sued the Moores in Columbiana County Common Pleas Court seeking specific performance of the purchase agreement, or in the alternative, damages resulting for the alleged breach of that agreement. The Moores answered, denying the breach and, in the alternative, contesting the validity of the agreement. They included with their answer counterclaims and cross-claims. The counterclaim alleged that they were fraudulently induced into entering into the Purchase Agreement. Concerning the lease the Coldwells had signed with Patriot which was later assigned to Chesapeake, the Moores sought a declaration that they were the sole owners of all of the mineral rights. Although the Moores also included a third-party complaint against Patriot and Chesapeake, the Moores later dismissed their claims against them without prejudice prior to trial.

{¶ 13} On May 21, 2012, the Moores filed a motion for partial summary judgment on their counterclaim for declaratory relief. Specifically, the Moores sought a declaration that their mineral rights to the four subsurface parcels included oil and gas in addition to their undisputed rights to the coal. The trial court denied the motion, then, upon the Moores' motion to reconsider, granted the motion. In a January 2, 2013 judgment entry, the trial court declared that the Moores' mineral rights included oil and gas.

{¶ 14} A bench trial was conducted on February 19–20, 2013, to decide the remaining issues. On May 20, 2013, the trial court filed a judgment entry entering judgment for the Moores, finding that the Coldwells had failed to prove the existence of an enforceable contract. Because the court found that there was no enforceable contract, it did not make any findings “regarding the other issues presented, including

22 N.E.3d 1100

whether time was of the essence under the Purchase Agreement or whether the Moores were fraudulently induced to enter into the Purchase Agreement.” This appeal followed.

{¶ 15} The Coldwells raise three assignments of error. The Coldwells' first assignment of error states:

THE TRIAL COURT MADE A LEGAL ERROR WHEN IT RESCINDED THE CONTRACT ON THE GROUNDS OF MUTUAL MISTAKE OF FACT[.]

{¶ 16} Notably, the Coldwells do not take issue with any of the findings of fact the trial court made in the May 20, 2013 judgment entry it filed following the bench trial. They argue that the trial court erred as a matter of law in applying the law of mutual mistake to those facts. The Coldwells contend that there could not have been a mutual mistake where they intended to buy everything they did not have and the Moores intended to sell everything they have, with both intending that the Moores retain the royalties to the coal. In response, the Moores argue that there was a mutual mistake as to the most important term of the Purchase Agreement—the nature and scope of the property interest being conveyed.

{¶ 17} As indicated, the trial court granted the Moores rescission of the Purchase Agreement based on mutual mistake. The Ohio Supreme Court has expressly recognized the doctrine of mutual mistake as a ground for rescission where there is a mutual mistake as to a material part of the contract and where the complainant is not negligent in failing to discover the mistake. Irwin v. Wilson, 45 Ohio St. 426, 15 N.E. 209 (1887) (allowing the buyer in real estate purchase agreement to rescind). The Court reiterated its Irwin holding and explained that a mistake is material to a contract when it concerns a basic assumption on which the contract was based and has a material effect on the agreed exchange of performances. Reilley v. Richards, 69 Ohio St.3d 352, 353, 632 N.E.2d 507 (1994). If the parties' intentions are frustrated by mutual mistake, rescission is possible. Id.

{¶ 18} Mutual mistake requires a higher degree of proof than “a preponderance of the evidence.” The party alleging mutual mistake bears the burden of proving its existence by clear and convincing evidence. Frate v. Rimenik, 115 Ohio St. 11, 152 N.E. 14 (1926), paragraph one of the syllabus....